Corporate Sustainability at a Crossroads

Progress Toward Our Common Future in Uncertain Times

by: David Kiron, Gregory Unruh, Nina Kruschwitz, Martin Reeves, Holger Rubel, Alexander Meyer Zum Felde
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MIT Sloan Management Review and The Boston Consulting Group have been tracking corporate sustainability for the past eight years, surveying tens of thousands of managers and interviewing more than 150 executives and thought leaders, while producing eight annual reports and numerous blogs and articles. MIT SMR and BCG joined forces to increase knowledge about business adoption of sustainable practices and to support the integration of sustainability into business strategy. (See Appendix for summaries of the reports.)

Despite significant progress, corporate sustainability has arrived at a crossroads. In one direction, corporate leaders in sustainability remain a minority, and are unevenly distributed across geographies and industries. In the other direction, a handful of standout companies are demonstrating that sustainability can be a driver of innovation, efficiency, and lasting business value. Populist political movements around the world threaten to set back global diplomatic progress on issues like climate change and reverse recent regulatory trends. All of this complicates the calculus of corporate leaders and their sustainability strategies.

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About the Authors

David Kiron is the executive editor of MIT Sloan Management Review. He can be contacted at dkiron@mit.edu.

Gregory Unruh is the Arison Professor of Values Leadership at George Mason University and guest editor for MIT SMR’s Big Idea sustainability initiative. He can be contacted at gregoryunruh@gmail.com.

Nina Kruschwitz is the former senior project manager of MIT Sloan Management Review.

Martin Reeves is a senior partner and managing director in The Boston Consulting Group’s New York office and head of BCG’s Henderson Institute. He can be contacted at reeves.martin@bcg.com.

Holger Rubel is a senior partner and managing director and global sustainability lead in The Boston Consulting Group’s Frankfurt office. He can be contacted at rubel.holger@bcg.com.

Alexander Meyer Zum Felde is an expert principal for sustainability in The Boston Consulting Group’s Hamburg office. He can be contacted at meyerzumfelde.alexander@bcg.com.

Contributors

MIT Sloan Management Review

Cheryl Asselin, managing editor

Carolyn Ann Geason, designer

Elizabeth Hamblin, web production editor

Max Harless, graphics

Janet Parkinson, copy editor

Lauren Rosano, associate director, digital media

The Boston Consulting Group

Hanna Asmussen, associate

Matthew Clark, global marketing director – strategy

Elena Corrales, lead knowledge analyst

Hans-Georg Höllerer, associate

Sophie Zielcke, consultant

A special thank you to Knut Haanaes, who left BCG in 2016 to become a professor of strategy and international management at IMD in Lausanne, Switzerland. Knut played a key role in setting up the partnership between MIT SMR and BCG in 2008, when he was a senior partner and managing director for BCG. Knut made countless contributions to our research during the past eight years, even after he became the leader of BCG’s Global Strategy Practice.

Acknowledgments*

*Titles and affiliations listed were current at time of interview.

Shai Agassi, founder and CEO, Better Place

Francois Ajenstat, director of environmental sustainability, Microsoft Corp.

Tom Albanese, CEO, Rio Tinto

Ray Anderson, founder and chairman, Interface

Daniel Aronson, founder, Valutus

Brian Bacon, chairman, Oxford Leadership Academy

Christine Bader, author, The Evolution of a Corporate Idealist: When Girl Meets Oil

Balu Balagopal, senior partner and managing director, The Boston Consulting Group

Antoni Ballabriga, global head of responsible business, BBVA

Tima Bansal, director, Network for Business Sustainability

Naty Barak, chief sustainability officer, Netafim

Dan Bena, senior director of sustainable development, PepsiCo Inc.

Carl E. Binning, vice president health, environment, safety and community, BHP Billiton

Betsy Blaisdell, senior manager of environmental stewardship, The Timberland Company

Edgar Blanco, research director, MIT Center for Transportation & Logistics, MIT

David Blood, senior partner, Generation Investment Management

Andreas Bluethner, director of food fortification & partnerships, BASF

Roberto Bocca, director, emerging consumer markets, BP Alternative Energy

Roberta Bowman, senior vice president and chief sustainability officer, Duke Energy

Sheila Bowman, senior manager of outreach and education, Seafood Watch

Michael Bremans, chairman, Ecover Belgium NV

David Bresch, head of sustainability and political risk management, Swiss Re

Peter Bryant, partner, Clareo Partners; senior fellow, Kellogg Innovation Network, Kellogg School of Management

Bastian Buck, director reporting standard, Global Reporting Initiative

John Buckley, global head, corporate social responsibility, BNY Mellon

Robin Chase, cofounder and former CEO, Zipcar; founder, Buzzcar

Matthew Clark, marketing director strategy, The Boston Consulting Group

Jason Clay, senior vice president, market transformation, WWF

John Compton, CEO, PepsiCo America Foods

Douglas Conant, former CEO, Campbell Soup Company; founder, ConantLeadership

Ken Cottrill, writer, MIT Center for Transportation & Logistics, MIT

Jérôme Courcier, CSR officer, Sustainable Development Division, Crédit Agricole S.A.

Vivienne Cox, executive vice president, BP

Robert Eccles, professor of management, Harvard Business School; chairman, Arabesque Partners

John Ehrenfeld, executive director, International Society for Industrial Ecology

John Elkington, founder, SustainAbility

Steve Eppinger, professor of management science and innovation, MIT Sloan School of Management

Shelly Esque, vice president of legal and corporate affairs, Intel and chair of the board of the Intel Foundation

Dan Esty, professor of environmental law and policy, Yale University

Thomas J. Falk, CEO, Kimberly-Clark

Suzanne Fallender, director of CSR strategy & communications, Intel Corporation

Alyssa Farrell, marketing manager for sustainability solutions, SAS

Lewis Fix, vice president of brand management and sustainable product development, Domtar

Steve Fludder, vice president, Ecoimagination, GE

Nick Folland, group corporate affairs, Kingfisher

Jay Forrester, Germeshausen Professor Emeritus of Management, MIT Sloan School of Management

Kathy Gerwig, vice president of employee safety, health and wellness and environmental stewardship, Kaiser Permanente

Brian Gonzalez, director of global education sales, Intel

Santiago Gowland, vice president of brand & global corporate responsibility, Unilever

Peter Graf, chief sustainability officer, SAP AG

Aida Greenbury, managing director of sustainability & stakeholder engagement, Asia Pulp & Paper

Scott Griffin, CEO, Greif Corporation

Brad Haeberle, vice president of marketing, Siemens

Hal Hamilton, codirector, Sustainable Food Laboratory

Amy Hargroves, director of corporate responsibility, Sprint

Katie Harper, manager, sustainable supply chains, Sears Canada

Stuart Hart, S.C. Johnson Chair in Sustainable Global Enterprise, Samuel Curtis Johnson Graduate School of Management, Cornell University

Jørgen Ole Haslestad, president and CEO, Yara

Paul Hawken, author, environmentalist and CEO, Biomimicry Ventures Group

Rebecca Henderson, Senator John Heinz Professor of Environmental Management, Harvard Business School

Howard Herzog, principal research engineer, MIT Laboratory for Energy and the Environment

Dan Hesse, CEO, Sprint Nextel Corporation

Andrew Hewitt, founder, Gamechangers 500

John Hofmeister, founder and CEO, Citizens for Affordable Energy

Jeff Hollender, chief inspired protagonist and cofounder, Seventh Generation

Patrick Hynes, deputy director of member relations, Clinton Global Initiative

Al Iannuzzi, senior director of worldwide health and safety, Johnson & Johnson

Ioannis Ioannou, associate professor of strategy and entrepreneurship, London Business School

Mitch Jackson, director of environmental affairs and sustainability, FedEx

Olivier Jaeggi, founder and managing partner, ECOFACT

Jason Jay, director, MIT Sloan Initiative for Sustainable Business and Society, MIT Sloan School of Management

Hans Jöhr, corporate head of agriculture, Nestlé SA

Nathan Jones, vice president for government and institutional sales, HTI, Eastman Chemical

Kim Jordan, founder, New Belgium Brewing

Patricia Jurewicz, director, Responsible Sourcing Network

Charles Kane, president & chief operating officer, One Laptop Per Child

Georges Kern, CEO, IWC

William Kornegay, senior vice president, Hilton Worldwide

Cary Krosinsky, adjunct lecturer, Brown University

Bob Langert, vice president of corporate social responsibility, McDonald’s Corp.

Judith Layzer, associate professor of environmental policy, MIT

Chris Librie, director, environmental initiatives, HP

Bernard Lietaer, author and academic chairman, ACCESS Foundation

Richard Liroff, executive director, Investor Environmental Health Network

Richard Locke, deputy dean and professor of entrepreneurship, MIT Sloan School of Management

Amory Lovins, cofounder, chairman, and chief scientist, Rocky Mountain Institute

L. Hunter Lovins, president and founder, Natural Capital Solutions

Mindy Lubber, president, CERES

Christoph Luenenburger, leader of sustainability practice, Egon Zehnder

Thomas Malone, professor of management, MIT Sloan School of Management

David Mann, chief of staff, Khosla Ventures

David Marks, Goulder Professor of Civil and Environmental Engineering and Engineering Systems, MIT

Lord Robert May, professor, Oxford University and Imperial College, London

William McDonough, founding partner, William McDonough and Partners

Chris McGrath, vice president of external affairs, Kraft Foods Group Inc.

Michael Meehan, CEO, Global Reporting Initiative

Ronald J. Meissen, senior director of sustainability, Baxter Healthcare Corporation

Tim Mohin, former director of sustainable development, Intel

Ernie Moniz, director, MIT Energy Initiative

Paul Murphy, CEO, Valid Nutrition

Adil Najam, professor, Boston University

Jacqueline Novogratz, founder and CEO, Acument Fund

Frank O’Brien-Bernini, chief sustainability officer, Owens Corning

William O’Rourke, vice president, sustainability and environment, health, and safety, Alcoa

Eric Olson, senior vice president, BSR

Chris Page, director of climate and energy strategy, Yahoo!

Kyung-Ah Park, managing director and head of environmental markets group, Goldman Sachs

Rod Pearse, CEO and managing director, Boral Limited

Claus Stig Pedersen, head of corporate sustainability affairs, Novozymes

Mike Pedersen, group head, wealth management, TD Bank

Andrew Pelletier, vice president of corporate affairs and sustainability, Walmart Canada

Dierk Peters, director, WWF Sustainable Seafood Initiative

John Pflueger, principal environmental strategist, Dell Inc.

Chris Pinney, president, High Meadows Institute

Paul Polman, CEO, Unilever

Lawrence Pratt, senior lecturer, INCAE Business School

Jorgen Randers, professor of climate strategy, Norwegian Business School

Andreas Regnell, head of strategy and environment, Vattenfall

John Reilly, senior lecturer, MIT

Agneta Rising, vice president and head of environment, Vattenfall

Dawn Rittenhouse, director of sustainable development, DuPont

Harriet Ritvo, professor, MIT

Walter Robb, co-president and CEO, Whole Foods Market

Nick Robins, head, Climate Change Centre of Excellence, HSBC

Catherine Roche, managing director, BCG Dusseldorf

Jim Rogers, president and CEO, Duke Energy

Cathy Ross, senior program officer, Latin America program, Open Society Foundations

George Roth, principal research associate, MIT Sloan School of Management

John Ruggie, Berthold Beitz Professor in Human Rights and International Affairs, Kennedy School of Government, Harvard University

Gwen Ruta, vice president of corporate partnerships, Environmental Defense Fund

Christian Rynning-Tønnesen, president and CEO, Statkraft

John Sall, cofounder and executive vice president, SAS

Gisela Sanchez Maroto, director of corporate relations, Florida Ice & Farm Co.

Len Sauers, vice president of global sustainability, P&G

William A. Sawyer, vice president and general manager, Intel Corp.

Auden Schendler, vice president of sustainability, Aspen Skiing Company

Ryan Schuchard, associate director, climate change, Business for Social Responsibility

John Schulz, director of sustainability operations, AT&T Inc.

Peter Schwartz, co-founder and chairman, Global Business Network

Jeff Seabright, vice president, environment and water resources, The Coca-Cola Company

Omar Selim, CEO, Arabesque

Peter Senge, senior lecturer, MIT Sloan School of Management

Jeff Senne, corporate responsibility operations leaders, PwC

Yossi Sheffi, professor, MIT; director, MIT Center for Transportation and Logistics

Cameron Sinclair, executive director and co-founder, Architecture for Humanity

Sarah Slaughter, senior lecturer, MIT Sloan School of Management

Beth Springer, executive vice president of international and personal care, Clorox

Dave Stangis, vice president of public affairs and corporate responsibility, Campbell Soup Company

Hannah Clark Steiman, writer, Metamorphos/Us

John Sterman, professor of management, MIT Sloan School of Management

Mark Stoler, director, environmental, health and safety operations, General Electric Co.

David Struhs, vice president of sustainability, Domtar

Pamela Styles, principal, Next Level Investor Relations

Joseph Sussman, JR East Professor of Civil and Environmental Engineering, MIT

Graeme Sweeney, executive vice president of CO2, Royal Dutch Shell

William A. Swope, vice president & general manager, corporate sustainability group, Intel Corp.

Prasanna Tambe, professor, NYU Leonard Stern School of Business

Zaid Tassabehji, director, utilities and asset management, Masdar

Sarah Teslik, senior vice president, communications, public affairs and governance, Apache Corp. (ISF)

Wood Turner, former vice president of sustainability innovation, Stonyfield Farm

Mark Vachon, vice president, GE ecomagination, GE

Susan Voigt, vice president, environment, health, safety and sustainability, Bristol-Myers Squibb Company

Stefan Waechter, knowledge analyst, The Boston Consulting Group Inc.

Vijay Waitheeswaran, correspondent, The Economist

Andy Wales, vice president of sustainable development, SABMiller

Brian Walker, CEO, Herman Miller

Peggy Ward, director, enterprise sustainability strategy team, Kimberly-Clark Corporation

Ulrich Wassmer, professor of strategy, EMLYON Business School

Allen White, senior fellow and vice president, Tellus Institute

Gaylon White, director of design programs, Eastman Chemical

Peter White, director for global sustainability, Procter & Gamble

Scott Wickers, chief sustainability officer, United Parcel Service Inc.

Kathrin Winkler, chief sustainability officer, EMC

Darcy Winslow, former general manager, sustainable business opportunities, Nike

Don Young, senior vice president of corporate sustainability, Smith & Nephew

References

1. The World Commission on Environment and Development, “Our Common Future,” Oxford University Press, 1987.

2. United Nations Global Compact, n.d., https://www.unglobalcompact.org.

3. “GRI and Sustainability Reporting,” n.d., www.globalreporting.org.

4. D. Kiron, N. Kruschwitz, K. Haanaes, M. Reeves, S.-K. Fuisz-Kehrbach, and G. Kell, “Joining Forces: Collaboration and Leadership for Sustainability,” Jan. 12, 2015, https://sloanreview.mit.edu.

5. G. Unruh, D. Kiron, N. Kruschwitz, M. Reeves, H. Rubel, and A.M. zum Felde, “Investing for a Sustainable Future,” May 11, 2016, https://sloanreview.mit.edu.

6. E.F. Williams’ book, “Green Giants: How Smart Companies Turn Sustainability into Billion-Dollar Businesses” is one source for this, but also BASF, Unilever, and others make this claim.

7. D. Kiron, N. Kruschwitz, H. Rubel, M. Reeves, and S.-K. Fuisz-Kehrbach, “Sustainability’s Next Frontier,” Dec. 16, 2013, https://sloanreview.mit.edu.

8. Swiss Re, “Sigma Explorer,” n.d., http://www.sigma-explorer.com.

9. H. Tabuchi, C. Rigby, and J. White, “Amazon Deforestation, Once Tamed, Comes Roaring Back,” New York Times, February 27, 2017.

10. P. Lacy, T. Cooper, R. Hayward, and L. Neuberger, “A New Era of Sustainability,” June 2010, http://www.unglobalcompact.org.

11. Institute for Sustainable Investing, “The Demanding World of Sustainable Investing,” Nov. 17, 2016, www.morganstanley.com.

12. UNEP Finance Initiative, “Integrated Governance: A New Model of Governance for Sustainability, June 2014, http://www.unepfi.org.

13. United Nations, “Principles for Responsible Investment: About the PRI,” n.d., www.unpri.org.

14. Sustainability Accounting Standards Board, “Mission,” n.d., https://www.sasb.org.

15. Sustainability Accounting Standards Board, “SASB 2015 Annual Report,” June 1, 2016, https://www.sasb.org, p. 13.

16. Sustainable Stock Exchanges Initiative, “2016 Report on Progress,” 2016, http://www.sseinitiative.org.

17. See G. Unruh et al., “Investing for a Sustainability Future.” More generally, aggregators of sustainability tools are on the rise. One example being developed at MIT Sloan School of Management is discussed in Bankson, A. M., “Find, Compare, Choose, and Learn About Sustainability Tools With SHIFT,” Nov. 16, 2016.

18. A. Davidson, “’Sustainable Investing’ Goes Mainstream,” Wall Street Journal, Jan. 13, 2016, https://www.wsj.com.

19. Climate Bonds Initiative, “Bonds and Climate Change: The State of the Market in 2016,” July, 2016, https://www.climatebonds.net.

20. E.L. Guidice and A. Panerai, “Here’s Why the Green Bond Market Is Set to Keep Growing,” Aug. 16, 2016, www.weforum.org; Bank for International Settlements, “BIS Statistics: Charts,” BIS Quarterly Review, June 2016, http://www.bis.org.

21. Clark, P., “Drax Seeks to Reinvent Itself For a Post-Coal Future,” Financial Times, Nov. 30, 2016, https://www.ft.com.

22. Survey respondents from Mexico tend to identify themselves with Latin America, not North America. So, “North America” in this context means the United States and Canada, not Mexico.

23. G. Unruh et al., “Investing for a Sustainable Future.”

24. See, for example, articles in a recent special report on emerging markets in MIT Sloan Management Review: M. Hensmans, “Competing Through Joint Innovation,” MIT Sloan Management Review 58, no. 2 (winter 2017): 26-33; A. Devang, C. Kruse, A. Parker, and P. Siren, “The Next Wave of Business Models in Asia,” MIT Sloan Management Review 58, no. 2 (winter 2017): 35-39; M. D. R. Chari, K. Luce, and I. Thukral, “Mastering the Market Intelligence Challenge,” MIT Sloan Management Review 58, no. 2 (winter 2017): 41-49; and S. Prashantham and G. S. Yip, “Engaging With Startups in Emerging Markets,” MIT Sloan Management Review 58, no. 2 (winter 2017): 51-56.

25. CB Bhattacharya and P. Polman, “Sustainability Lessons From the Front Lines,” MIT Sloan Management Review 58, no. 2 (winter 2017): 71-78.

26. Bhattacharya and Polman, “Sustainability Lessons From the Front Lines,” p. 73.

27. “Sustainable Living Brands Leading Unilever Growth,” May 20, 2016, www.unilever.com.

28. “Worn Wear: Better Than New,” n.d., http://www.patagonia.com/worn-wear.html

29. “Retail Growth by Not Growing,” Dec. 2, 2015, http://www.pymnts.com.

30. S. Griffin, H. Buxel, and Gökçe Esenduran, “Surprising Insights from Environmental Screenings,” MIT Sloan Management Review, Oct. 16, 2013, https://sloanreview.mit.edu.

31. BASF, “Examples for Accelerator Solutions,” n.d., https://www.basf.com.

32. SASB, “SASB Materiality Map™,” n.d., https://www.sasb.org

33. Jacobs Douwe Egbert acquired the Kraft coffee unit in 2015 from Mondelez, which was spun off from Kraft Foods in 2012.

34. Wal-Mart Stores, Inc., “2016 Global Responsibility Report,” n.d., http://corporate.walmart.com.

35. M. Egan, “Ecoimagination Ten Years Later: Proving That Efficiency and Economics Go Hand-In-Hand,” Oct. 29, 2015, http://www.gereports.com.

36. “The 2016 Sustainability Leaders,” 2016, www.globescan.com.

37. Interview with Blaisdell took place for our 2015 “Joining Forces: Collaboration and Leadership for Sustainability,” report, op. cit. (Ref. 4), when she was a manager at Timberland.

38. “Higg Index,” 2017, http://apparelcoalition.org.

39. W. Kornegay, E. Olson, and D. Kiron, “Bringing Sustainability Metrics to Purchasing Decisions,” Nov. 13, 2015, https://sloanreview.mit.edu.

40. BSR, “Collaborative Initiatives: Procurement Leadership Group,” n.d., https://www.bsr.org.

41. D. Kiron, N. Kruschwitz, K. Haanaes, M. Reeves, and E. Goh, “The Innovation Bottom Line,” Feb. 5, 2013, https://sloanreview.mit.edu.

42. UNEPFI, “Integrated Governance: A New Model of Governance for Sustainability.”

43. Paine, L.S. “Sustainability in the Boardroom: Lessons from Nike’s Playbook.” Harvard Business Review 92, no. 7-8 (Jul-Aug 2014): 87-94.

44. R.G. Eccles and T. Youmans, “The Board That Embraced Stakeholders Beyond Shareholders,” MIT Sloan Management Review, June 9, 2016, https://sloanreview.mit.edu.

45. Atlas Copco AB, “Atlas Copco Annual Report 2015,” http://www.atlascopcogroup.com.

46. These results were published in G. Unruh et al., “Investing for a Sustainable Future.”

47. M. Santisteve, “The IR Opportunity to Communicate Sustainability,” Nov. 25, 2014, www.irmagazine.com.

48. D. Kiron et al., “Sustainability’s Next Frontier.”

49. D. Kiron et al., “Joining Forces.”

50. Ibid.

51. Interview with Turner took place for D. Kiron et al., “Joining Forces,” when he was a manager at Stonyfield Farm.

52. Bhattacharya and Polman, “Sustainability Lessons.”

53. K. Earley, “More Than Half of All Businesses Ignore UN’s Sustainable Development Goals,” The Guardian, Sept. 30, 2016, www.theguardian.com.

54. I. Embree, “How 17 Companies Are Tackling Sustainable Development Goals (and Your Company Can, Too),” The Huffington Post, Sept. 13, 2016, www.huffingtonpost.com.

55. L. Elliott, “Carney Warns of Risks From Climate Change ‘Tragedy of the Horizon’,” The Guardian, Sept. 29, 2015, www.theguardian.com.

56. G. Unruh, “Ronald Reagan: The Father of CSR,” The CSR Blog, March 9, 2011, www.forbes.com.

i. G. Unruh et al., “Investing for a Sustainable Future.”

ii. Content in this sidebar is adapted from R. Post, “For BASF, Sustainability Is a Catalyst,” MIT Sloan Management Review, Oct. 15, 2014, https://sloanreview.mit.edu.

iii. For the design of this document, see D. Kiron, N. Kruschwitz, M. Reeves, and E. Goh, “The Benefits of Sustainability-Driven Innovation,” MIT Sloan Management Review 54, no. 2 (winter 2013): 69-73.

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Comment (1)
Catherine Gonzalez
More than ever we need to celebrate corporations that are actually doing something for the environment.    

So I wanted to add to the discussion the winners of our 2017 sustainability award: https://sealawards.com/sustainability-award-2017/.

Cheers!